On 26 November 2025, the Government introduced draft legislation into Parliament that will give effect to the long-awaited reforms to the financial services regulatory regime for foreign financial service providers (FFSPs). The proposed changes are contained in Schedule 2 of the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025 (2025 Bill).

The current exemptions from the requirement to hold an Australian financial services (AFS) licence for FFSPs (i.e. the 'sufficient equivalence' and 'limited connection' relief) were due to expire on 31 March 2026. Helpfully, on 5 December 2025, ASIC extended the expiry date for the existing exemptions a further 12 months – which means they are now set to expire on 31 March 2027.

Third time lucky?

This is now the government's third attempt to introduce legislative amendments to reform the FFSP regulatory regime. Each of the past two Bills were introduced into Parliament but lapsed due to the calling of a federal election.

The text of Schedule 2 of the 2025 Bill is largely the same as the previous draft legislation introduced by the Government in November 2023 (see Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023) – and there are no material changes compared to the previous proposal.

Accordingly, Schedule 2 of the 2025 Bill proposes to establish three new exemptions for FFSPs from the requirement to hold an AFS licence in the same manner as previously contemplated by government. These new exemptions are intended to replace the existing FFSP exemptions contained in various ASIC class order instruments.

For a more comprehensive summary of the proposed reforms, see our Alerts on:

• The exposure draft of the first Bill: Foreign licensing exemption regime released
• The first draft Bill as introduced into Parliament: Foreign licensing exemption Bill in Parliament
• The exposure draft of the second Bill: The FFSP logjam breaks
• The first draft Bill as introduced into Parliament: Government delivers FFSP to Parliament

It is proposed that the amendments made by Schedule 2 of the 2025 Bill will commence 12 months after the 2025 Bill is assented to.

ASIC relief

In tandem with the re-introduction of the draft legislation and its proposed 12 month delayed commencement, ASIC has released an instrument to roll over existing relief for FFSPs until 31 March 2027. Accordingly, FFSPs may continue to rely on the following licensing exemptions that were set to expire on 31 March 2026 for another year:

• the sufficient equivalence relief for entities who rely on the exemptions for entities regulated by the German BaFin, Hong Kong SFC, UK FCA, Singapore MAS, US SEC, Federal Reserve, OCC or CFTC, or Luxembourg CSSF; and
• the limited connection relief for entities which do not carry on any activities in Australia.

ASIC has also delayed the commencement of the licensing relief in ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199 to 1 April 2027.

What this means for you

FFSPs that are already undertaking business in Australia or looking to expand into Australia should therefore:

1. Consider whether they are eligible to rely on one or more of the new FFSP licensing exemptions
2. Monitor the progress of the 2025 Bill through Parliament
3. Once the Bill is passed, take necessary steps to rely on the new FFSP licensing exemptions if required (e.g. new notification requirements and conditions)

If you have any questions about how these changes may affect your operations, please do not hesitate to contact us.

Key links

• Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025
• Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025 Explanatory Memorandum 
• ‘ASIC extends transitional relief for foreign financial services providers’